Teutonic Knight's Comments

In Newsweek's cover story this week, Harvard economist Niall Ferguson calls the U.S. "An Empire at Risk": "If the United States succumbs to a fiscal crisis, as an increasing number of economic experts fear it may, then the entire balance of global economic power could shift." Paul Krugman responds: "These [debt] numbers look huge, but our entire economy is huge."

Sun, 29 Nov 2009 21:51:56 -0500

I have the following observation on Paul Krugman response: "These [debt] numbers look huge, but our entire economy is huge."

It is a double-edge sword. Case in point: a rich man with many mansions, yachts, motor cars, servants has to bring in enough money just to service and maintain those assets, which cannot be left to deteriorate. So "...our entire economy is huge..." could be an asset or a liability, depending on the trajectory.

TK

Food stamps, rebranded as "nutritional aid," now help feed one in four U.S. children, and one in eight adults - even as welfare rolls have stayed virtually flat.

Sun, 29 Nov 2009 17:38:12 -0500

dizzyfingers - - -

I beg your pardon, did you say Communism? Didn't even the Chinese have to evolve from that Utopia concept just in the nick of time?

Amen and Amen.

TK

On Nov 29 05:08 PM dizzyfingers wrote:

> Untrusting investor: Your last two paragraphs: right on, excellent
> analysis. I too believe we're seeing the twililght (or the approaching
> dark) of the end of US world power, at least in its post-WWII incarnation.
> Right now it looks like what comes next is Communism. I hope not,
> but I don't yet see critical-mass of public opinion that would signify
> otherwise.

Food stamps, rebranded as "nutritional aid," now help feed one in four U.S. children, and one in eight adults - even as welfare rolls have stayed virtually flat.

Sun, 29 Nov 2009 12:13:56 -0500

La Marque - - -

I concur with your comment; however, I would like to highlight the motivation behind this "outsourcing" that you described so vividly.

Americans do not want to do the lowly nuts and bolts and shoving work anymore. They permissively and tacitly condone the illegal's so as to coveting their cheap labor so that could go into finance, banking pushing papers. Ah, and into Wall Street, the cocaine-like M&A jobs, the never-ending night lives and fashion centers. The ranks of the Bureaucrats had swollen, they love it, it is a Day Soap. When they (the Bureaucrats) get together, it is always I'm Grade so and so, and I'm climbing up to Grades so and so, you know, that everlasting Gravy Train.

We do it to ourselves. Blame no one.

The turn-around just hasn't even started yet.

TK

On Nov 29 11:18 AM La Marque wrote:

> This is what happens to a country when it outsources its basic manufacturing
> industries such as textiles and other labor intensive ones.
> We are on the verge of eliminating the middle class by putting as
> many as possible on some form of government income with its attendant
> rules of how much one can have in assets.

Food stamps, rebranded as "nutritional aid," now help feed one in four U.S. children, and one in eight adults - even as welfare rolls have stayed virtually flat.

Sun, 29 Nov 2009 11:07:48 -0500

As one SA author articulated of late, we have now become a Nanny State.

Canadian Banks Have a Fruitful Friday Despite Dubai

Sat, 28 Nov 2009 10:21:10 -0500

British banks have the lion share of exposure because of the geopolitical factor - the UAE did not become independent from Great Britain until 1971. Because of this lineage, the British are much more closely tied to this Gulf state from a heritage standpoint, and consequently the most heavily impacted.

Another Crisis Looms Right Around the Corner

Fri, 27 Nov 2009 17:29:30 -0500

Alex -

Concur, also at a very enticing low margin interest rate, and tax-deductible too courtesy of Professor B. Shalom B.

TK

On Nov 27 01:05 PM Alex Filonov wrote:

> Correction: all carry traders are using leverage, it's the name of
> the game. Before using dollars to buy something, carry traders borrow
> them.

Another Crisis Looms Right Around the Corner

Fri, 27 Nov 2009 17:26:54 -0500

Doc 224899 -

Concur; however, I believe Mr. Obama, after having been voted out of office in 2012 and be replaced by a Mormon, will watch the Second Great Depression continue to unfold LONG AFTER he becomes a private citizen (perhaps from the library name after him).

TK

On Nov 27 12:02 PM Doc 224899 wrote:

> The Age of Aqarius is past, and now we gaze in fear at the looming
> shadows cast by the rising Obamaclypse.

Another Crisis Looms Right Around the Corner

Fri, 27 Nov 2009 17:22:08 -0500

Graham -

Concur, as you noted elsewhere earlier, the hidden depression had really started as early as the 2001-2009 decade.

TK

On Nov 27 03:56 PM Graham and Dodd Investor wrote:

>
> "The time to avoid a depression was years ago."
>
> In 2001, Alan Greenspan could (and should) have let the U.S. incur
>
> financial "bronchitis" instead of aggressively lowering rates.

>
> Because now the prospect is for "pneumonia."

Another Crisis Looms Right Around the Corner

Fri, 27 Nov 2009 17:19:47 -0500

Geoffster -

Concur, since our military is a way of life.

TK

On Nov 24 07:31 PM The Geoffster wrote:

> Don't worry. If it gets as bad as you think, the military will take
> over and you can do your shopping at the PX.

Obama will rise and fall with the dollar: The electorate is only as happy as the value of the greenbacks in their pockets.

Thu, 26 Nov 2009 10:56:24 -0500

One year after Obama having been elected to Office, voters can now catch a glimpse of his real face.

He is dedicated to spreading wealth vice creating wealth.

The unemployment rate looks more like the rising temperature shown on the thermometer of a patient having a fever.

So what is he like - another Bosch dressed in a different costume, with a bit more pizzazz and dressing.

TK

In a world where one man must fight to keep from being buried in debt ... Now appearing before your holiday movies: the Fed. The central bank is paying for 45-second ads to appear in 12 metro theaters, encouraging responsible credit-card use in the holiday shopping season.

Wed, 25 Nov 2009 22:33:38 -0500

It doesn't make sense to me. It accentuates their seemingly ongoing hypocrisy.

They (the Fed) are auctioning Treasuries at ~ 0 % akin to taking that 0 % balance transfer from the Big Banks credit card, only to have to pay them back later when that rate resets.

It is mind-boggling why they even have to waste money doing this. As I related elsewhere earlier, they "Live in a World of Their Own". Come join me in singing the 60's Seekers "We Live in a World of Our Own".

Things that the Bureaucrats would do are scary.

TK

From Financial Armageddon, a roundup of of holiday spending surveys, with salient excerpts. "Those who have been counting on a V-shaped recovery in the (consumer-dependent) U.S. economy might want to reconsider."

Tue, 24 Nov 2009 14:44:57 -0500

Probably a inverted W all the way to 2025 is my take. Things being the way it is, it will most likely take 10 to 15 years to fix.

The Puzzles of U.S. Political Economy Today

Tue, 24 Nov 2009 14:30:11 -0500

Mr. Brad DeLong -

Thank you for a good article. I particularly like your using the word "..Puzzling...".

Well, if you look back our history over the past ~ 60 years since the end of the Second World War, two words sum up our nation's naiveté - - - "Bail Out and Bubbles".

One could go back and examine our deeds, economically and politically on immigration, foreign wars, dot.com, housing, S&L, credit crisis, national debts, mortgage crisis, auto incentives, SUV's, and others too numerous. One thing is clear, we never stop creating "Bubbles and Bailouts" indispensably.

TK

Why are T-Bill Yields Again Approaching Zero?

Sun, 22 Nov 2009 00:19:04 -0500

Good article and good comments. True, the last sentence in this article is quite cryptic.

Does the author mean to hint that the "surprise lurking around the next corner (i.e., 2010)" would be a big rally or a big crash of the market?

I parked all my money, half in TIPS, and half in short-term < 2-year maturity Treasuries. Is this a good strategy?

Would some SA commentator be kind enough to give me some free advice here?

Thanks in advance.
TK

Roubini on Unemployment: 'The Worst Is Yet to Come'

Fri, 20 Nov 2009 00:53:38 -0500

To Al-USA - -

Concur.

But I would also recommend we change the names and signs of all our nation's numerous presently so-called "Leadership Programs, Leadership Centers" to "Lack of Leadership Programs, Lack of Leadership Centers" to reflect the need for self-examination for the plundering of precious resources by the overpaid (and greedy) CEO's

TK.

On Nov 19 02:29 AM Al-USA wrote:

> Teutonic Knight wrote:
> "
> For now, tighten up our belts, lower wages and salaries, then we
> could become once again competitive.
> "
>
> You mean for the overpaid CEO's right?
>
> Thought so...

Why the Stock Market Should Crash

Tue, 17 Nov 2009 14:25:49 -0500

Charles -

Good article. The other thing is the psychological effects too.

Of late we heard the Bill Gates and Warren Buffet coming out of the woodwork to mutter to the crowds saying "...Hey guys, the worst is behind us...(the sky is all clear now, everything is going to a okay)..."

Those words in parenthesis are mine. Well, doesn't this sound too familiar? As with the Volkswagen Toureg and the Toyota Vanzer, these two models are their worst sellers, and yet they spent tons of money in the TV airwaves pounding their virtues and pushing their sales. In actuality, the VW Toureg had been rated as one of the least reliable and slowest-selling models! Similarly, the Toyota story is everyone's guess.

The point is Companies always push hardest for those that are hardest to sell (remember your real estate agent kept showing you over and over that particular house that you had doubts about?)

Moreover, if indeed the worst had come and gone, it would be obvious to everyone. The fact that these two Yesterday's gentlemen had to say it openly is by itself suspect. If indeed the Dow would plunge to 3000 in 2010, their wealth would simply be cut in half at least. So you see the vested interest there.

TK

Roubini on Unemployment: 'The Worst Is Yet to Come'

Tue, 17 Nov 2009 12:10:36 -0500

Things don't look too good, isn't it?

The Obama regime hasn't listened well so far one year into coming into office. Partly, being human, we don't want to hear let alone believing in bad news.

Mr. Obama is a very frightened man deep inside him, so he clings onto the old Bushie appointees such as the Timmy and Benny. These folks are patriotic Americans, no doubt, but they were part of the gang that steered us into this mess. Consequently, their actions tend to be pro-self-denial and regrettably, covering their tracks.

There is no magic with unemployment numbers. Folks, we are in real world unfolding, Globe-Trotting to China (Hillary once, Obama now, and Hillary twice) just won't magically fix anything here at home. To ask the 1.3B Chinese citizens to rush to buy American goods to give us jobs is pretty far-fetched.

For now, tighten up our belts, lower wages and salaries, then we could become once again competitive. We just can't print ourselves out of this mess.

TK

The FDIC's failure Friday claims a smaller California bank (at a cost to the Deposit Insurance Fund of $27.4M) and - via a purchase-and-assumption agreement with IBERIABANK of Louisiana - two bigger ones, in Sarasota and Naples, Fla., at a combined cost of $959M.

Sat, 14 Nov 2009 00:00:34 -0500

ebworthen -

Your comment sounded to me similar to Noah crying to the sinful multitude before the Great Flood coming.

But yeah, behold ye all, I see the stock market boys are still stooped down around that sand-box playing a game of marble balls, without heeding.

TK

Watch out, says Hong Kong leader Donald Tsang; the next crisis is coming from the Fed's zero-interest-rate policies: "I’m scared and leaders should look out ... America is doing exactly what Japan did last time." He thinks a dollar carry trade fueled by cheap currency is inflating an Asian asset bubble.

Fri, 13 Nov 2009 11:53:02 -0500

Is this an oracle from one who directly intervened in the Hong Kong stock market in their 1998 financial crisis? Donald Tsang, then Hong Kong Special Administrative Region (SAR) Financial Secretary directly purchased shares in the open market in the Heng Sang Stock Exchange to foil speculators who were shorting. Ironically though, it paid off!

On the other hand, credit is due his predecessor then SAR Chief Executive Tung Chee-Hwa for freezing and even rolling back the Hong Kong Civil Service salaries.

America has now fallen into hard times. Are we ready to listen to the Asians? Or are we Americans willingly and blindly going our way?

Oh well, Frank Sinatra singing "...I did it MY WAY..." comes to my ears and mind. So, BHO, Tim, and Benny, come join Frank in singing "I did it MY WAY".

TK

Bankrupt Nortel Networks extends the deadline to make offers for the optical networking unit it's selling, as it looks like nobody is yet topping Ciena's (CIEN -2.1%) stalking-horse bid of $390M and 10M shares (about $515M total).

Tue, 10 Nov 2009 12:26:53 -0500

Graham -

I believe you meant to say "...and the common stock is now worth very little" instead. The company is being auctioned off to collect "a few" bucks (loonies though). Oh, BTW, I worked for NT in the early seventies and I wonder why the Canadian government did not bail it out. I always thought that Canada is much more "socialistic" than its cousin to the south. Whereas, surprise, we have had so many bailouts of late. Mind boggling. Would you care to comment?

TK

On Nov 10 11:53 AM Graham and Dodd Investor wrote:

> Nortel was once a great company, overreached, and is now worth very
> little.

Nancy Pelosi - Speaker of the House or Satan's hellspawn?

Tue, 10 Nov 2009 09:37:40 -0500

I recall there was a "Six-Million Dollar Man" TV Series starred by Mr. Major. Oh well, our lady speaker of the house would perhaps ascend to that fame of being a "Three Trillion Dollar Woman". Yes, $3T with the T.

You see, she spearheaded the TARP bill which was $700B, only to put millions in bonuses for the Greedy Bankers, the BHO Stimulus bill which was another $878B, and now this - $1.2T so-called health care bill.

So add it up: $(700+878+1200) = $2778B which is ~ $3T, not exactly but close.

I would have more respect for her if she would answer her call for being so altruistic by going back to serve in the soup kitchen in the slumps of San Francisco, CA, rather than mugging around with taxpayers money. You know, be a Bill Gates, create Billions of wealth, set up a Foundation to give it away, rush to Africa to save that continent...Don't mess with other folks money....

Challenging Week Coming for U.S. Treasury Market

Mon, 09 Nov 2009 18:55:14 -0500

untrusting investor - - -

You put it succinctly right. It is nothing more than a Shell Game. (Period).

TK

On Nov 09 05:40 PM untrusting investor wrote:

> If the Fed gave you money at 0-0.25% (like GS, WFC, etc. can get
> it for) and you could turn around and invest it in US debt at 3 -
> 4.5%, effectively getting 3-4% free interest, would you do it? Why
> do you think the big banks are not lending to anyone? They get ultra
> cheap Fed borrowing and guaranteed higher returns with no risk, and
> that is exactly what they are doing. Why should they lend to you
> for the extra risk involved, when they can make risk free money?
>
>
> How you would you like say a $20 billion loan at almost nothing and
> get to earn say 4% on that? 4% x $20 billion is a big chuck of change,
> especially when it's so easy for them.

U.S. Employment Picture Remains Ugly

Sun, 08 Nov 2009 23:37:55 -0500

chris coonan - - -

I appreciate it you're telling the truth as it is. Don't forget the BLS folks are bureaucrats. They mostly live in a world of their own.

(At this time my mind turns to one of my favorite folk songs sung by the 3 Australian Seekers - - - "We Live a World of Our Own", a 60's hit of such wonderful unforgettable lyrics and melody.

The real picture comes closer to what we encounter in our daily lives down in the trenches.

TK

On Nov 08 08:03 AM chris coonan wrote:

> After visiting the BLS website, I don't even believe the numbers
> anymore!
>
> I challenge the author to look into Architecture field on BLS. This
> is clearly a profession which has been dramatically impacted by job
> losses and mass layoffs. Underemployment is rampant.
>
> BLS is claiming a 9 percent current unemployment rate!!! Not possible.
> And when I emailed the AIA (American Institute of Architects in Washington)
> they sent me a copy of the BLS statistics...they must understand
> that those figures are WILDLY INCORRECT.

U.S. Employment Picture Remains Ugly

Sun, 08 Nov 2009 23:14:33 -0500

User 353732 - - -

I commend you for chronicling the issues at hand so well.

Things don't look good. The Real (note Real italics) is actually much worse. For example, the Statistical Recovery would have easily counted in those so-called "jobs saved and jobs created" by the administration as in the educational field and the health care fields, as those statistics are readily available and verifiable. However, those jobs are support jobs and are not in a sense real productive jobs. Some even called them "unreal jobs". As one leading SA commentator said last year in late 2008, there fields aren't much to be stimulated about.

On top of the above, I don't know what the continuing effects of the two wars on employment. True, there are a lot of ex-veterans now serving as contractors in the two war theaters, and monies are still pouring into the defense companies. However, once these are winded down, where will these folks be employed? In other words, the unemployment number is actually a lot worse if indeed being "normalized" by the above concerns.

Again, thank you for a very insightful comment, as always.

TK

On Nov 08 09:33 AM User 353732 wrote:

> In the New Economy recovery has been successfully decoupled from
> traditional engines of growth. This is the unheralded and mighty
> achievement of the US Regime which has found a way to tanscend the
> laws of economics, nature and morality.
>
> The Middle Class still losing jobs and income at a depressing pace?
> Not relevant to the Statistical Recovery
>
> Small bushiness failures very high and start ups very low? Not relevant
> to the Statistical Recovery
>
> Credit scarce and expensive for businesses and people who are creditworthy
> and create real value? Not relevant to the Statistical Recovery

>
> Corporate revenues well below a year ago and cash hoarding the norm
> amongst companies that have the means to do so? Not Relevant to the
> Statistical Recovery
>
> Residential and CRE not even mid way through the debt default and
> equity extinction process? Not relevant to the Statistical recovery
>
>
> Risk capital fleeing the US and investors fleeing the fake dollar?
> Not relevant to the Statistical Recovery
>
> Govt consuming the substance of the Productive Economy and wall St
> devouring Main St ? Finally, something--- the only things---- relevant
> to the Statistical Recovery

The Good, Bad and the Ugly: Australian, U.S. and U.K. Economies

Sun, 08 Nov 2009 21:53:54 -0500

taojaxx - - -

Perhaps another point of interest that came to my mind is the parallel between China/Australia and United States/Canada in the realm of industrialization. During the last century of 1900-2000, as America ramped up its Industrial Revolution, Canada because of its geographical proximity, naturally had become the "Backyard of the United States", supplying all sorts of natural resources, - be it timber, paper, minerals, oil, natural gas, coal, asbestos, hydro electric power, and even fresh water, to name a few.

And during the post-WWII decades of 1950-1970, the United States virtually soaked up all Canadian industrial enterprises by setting up subsidiaries, branch plants, and assembly plants. For many years until of late, this arrangement had worked very well as Canadian workers would enjoy almost the same benefits and pay as their American counterparts, with the "Loonie" hovering around the 90 cents to the US Dollar mark, as if to say Canada is at about 10% discount of its US equivalent goods and services in every walk of life.

There is a similarity emerging here with Australia to becoming that "Backyard of China". The recent appreciation of the $A and their central bank raising interest rate are indicative of such a trend.

Just a thought!

TK

On Nov 08 08:41 PM taojaxx wrote:

> Australia is growing because China is growing and buys its commodities.
> RBA hiking rates is like the little kid waving his arms when the
> orchestra gets loud and thinking he's conducting it. All they'll
> get is more carry trades, AUD appreciation with little impact on
> growth as commodities are priced in USD ( and shortly in yuan?).

The Good, Bad and the Ugly: Australian, U.S. and U.K. Economies

Sun, 08 Nov 2009 16:55:42 -0500

From a very simplistic and top-level perspective, my read is as below:

Australia will do okay because of its geographical proximity to China which is rising and hungry for her (Australia's) natural resources. Not that China does not have its own abundance of natural resources, they are smart to cash out the weakening dollar awash, to fuel their growth. Australia has that edge over Canada in this regard.

The U.S. Situation is buttressed by its vast landscape. The land is still there and remains available to grow food. This a giant fallback while taking time to recover in the industrial side of the house.

The U.K. does not have those advantages. Key manufacturing capabilities and capacities in auto, electronics, heavy equipment, optics, computers, communications, have long declined. The British Isles soil is thin and which was the driving force for pushing building up the British Empire (1600-2000) to begin with, as it was seeking to export its culture and its people. The financial crown jewel that it wrestled from the Dutch several centuries ago is now in peril.

TK

Charlie Gasparino: Another Crash 'Has to Happen Again'

Sun, 08 Nov 2009 16:38:26 -0500

cranmer - - -

Really? According to the history books, I believe they (the Nazis) had the Communists in Germany hunted down and annihilated. Weren't the Communists leftists too? Please correct me if I am incorrect.

TK

On Nov 08 02:34 PM cranmer wrote:

> The Nazis were leftists - see "Liberal Fascism" by Jonah Goldberg
>

Charlie Gasparino: Another Crash 'Has to Happen Again'

Sat, 07 Nov 2009 17:34:32 -0500

They have their "..Locale pay special adjustment..." too, you know.

On Nov 07 04:15 PM reveigel@msn.com wrote:

> A greedy, dishonest, ignorant, spendthrift, self-serving and incompetent
> government is the cause of our problems. Until this is changed nothing
> beneficial will ever happen. It sets the standard and the people
> follow, all the way to destruction.

Charlie Gasparino: Another Crash 'Has to Happen Again'

Fri, 06 Nov 2009 22:08:36 -0500

Dennis - - -

Just allow one 2-cent worthless thought from me. You said "...The Second Great Depression is upon us" - - - Would that be more becoming instead to say "...A Multitude of Greater and Greater Depressions leading to the Greatest Depression is upon us"?

TK

On Nov 06 04:14 AM Denis Gould wrote:

> It is amazing that this crisis has changed so little. Banks are set
> to pay huge bonuses, cautious investors (like insurance companies)
> continue to pile on ever more derivative exposure, and people still
> treat markets like casinos rather than venues for investment. Capital
> markets are there to facilitate the efficient allocation of capital
> but that is now so far removed from what they actually do that nobody
> is really aware of it. Only when these things change will we have
> reached the end point, and it looks like the crisis necessary to
> take us there needs to be magnitudes larger tthan the one we have
> just experienced. The second Great Depression is upon us.

In a brief reaction to a "sobering" jobs report, President Obama said he's examining new measures to spur growth and ran off a list of five: road/bridge investment, energy retrofitting, additional tax cuts for businesses to create jobs, boosting credit to small businesses and support for exporters.

Fri, 06 Nov 2009 12:31:08 -0500

Get this straight.

Government does not create jobs. In the present situation, they print more money and issue IOU's to borrow from foreign and domestic investors to fuel temporary tasks. Note temporary is in italics.

Those IOE's have to be repaid eventually.

So, Mr. President, please stop using the words "create jobs".

The government is not a business, nor a charity, and in our case has never made any money. In our case, as a matter, they now owe a lot of money. By "a lot" I mean in the tens of Trillions.

TK